Saturday, December 28, 2013

Rent control is returning to our big cities over the next ten years in a huge way never seen before. Cities which embrace high density residential "walking urbanism" schemes make it a certainty. Their residential model is impossible to function in the real world without it.

New socialist politicians, and I do mean SOCIALIST politicians, such as recently elected Kshama Sawant to the Seattle City Council make the proliferation of rent control a foregone conclusion.

Real estate investors and developers seriously need to read the seminal U.S. Supreme Court case on the subject, BLOCK v. HIRSH, 256 U.S. 135 (1921) to get a read on where future courts are going to come down on this subject. This case written by Oliver Wendell Homes is not only still good law it is the foundation of all existing rent control schemes such as New York City's "temporary wartime emergency" program still lingering on since November 1943.

BLOCK v. HIRSH dates back to a housing shortage in DC after World War I. Block was a tenant in a building. Hirsh bought the building and wanted to move himself into Block's unit when the existing lease expired. Block refused to move and the case began there. Imagine this scenario today. An owner cannot move into his own apartment without the tenant's consent!

Here is the opinion reprinted in full. The dissent is equally important since the same arguments are being raised---and ignored---today.

****************

Block v. Hirsch (No. 640)

Argued: March 3, 1921

Decided: April 18, 1921

50 App.D.C. 56, 73; 267 Fed. Rep. 614, 631, reversed.

The Act of October 22, 1919,
c. 80, Title II, 41 Stat. 297, created a commission with power, upon
notice and hearing, to determine whether the rent, service and other
terms and conditions of the use and occupancy of apartments, hotels and
other rental property in the District of Columbia, were fair and
reasonable and, if found otherwise, to fix fair and reasonable rents,
etc., in lieu; it provided that a tenant's right of occupancy should, at
his option, continue, notwithstanding the expiration of his term,
subject to regulation by the commission, so long as he paid the rent and
performed the conditions fixed by his lease or as modified by the
commission; reserved, however, to the owner his right to possession for
actual bona fide occupancy by himself, his wife, children or dependents, upon giving a 30 days' notice to quit; made the commission's
findings conclusive on matters of fact, but reviewable by the Court of
Appeals of the District on matters of law; limited the regulation thus
established to a period of two years, and declared that its provisions
were made necessary by emergencies growing out of the War, resulting in
rental conditions dangerous to the public health and burdensome to
public officers, employees and accessories, and thereby embarrassing the
Federal Government in the transaction of the public business. In an
action in which an owner, ignoring this legislation, and without serving
the required notice, sought to oust a tenant, holding over in violation
of a lease made before the act was passed, and in which the act was
relied on by the tenant, particularly its requirement of notice, but was
declared unconstitutional by the court below --

Held: (1) That the legislative
declaration of facts affording the ground for the regulation was
entitled to great respect, and was confirmed by common knowledge. P.
154.

(2) That the exigency existing in the
District clothed the letting of buildings there with a public interest
so great as to justify regulation by law, i.e., by the police power of Congress -- while such exigency lasts. P. 155.

(3) That, assuming the owner in this case
did not desire the premises for his own use (as it might have turned out
if the entire law had not been declared void) and treating the property
as held for rent, the effect of the act, in allowing the tenant to
retain possession at the rent stipulated in the expired lease or as it
might be modified by the commission, was not, under the circumstances,
an unconstitutional restriction of the owner's dominion and right of
contract or a taking of his property for a use not public. P. 156.

(4) That such regulation was justified as a temporary measure, even though it might not be as a permanent change. P. 157.

(5) That it did not become otherwise if the
"reasonable rent" it secured meant depriving the owner, in part at
least, of the power of profiting by the sudden influx of people to
Washington, caused by the needs of the Government and the War. P. 157.

(6) That the preference given to the tenant
in possession was justified as an incident of the policy of the
legislation. P. 157.

(7) That, the end being legitimate and the
means reasonably related to it, the wisdom of the means was not for the
courts to pass upon. P. 158.

(8) That the court was not prepared to say
in this case that the law, being valid in its principal aspects, was
invalid insofar as it might operate to deprive landlords and tenants of
trial by jury on the right to possession. P. 158.

ERROR to review a judgment of the court
below holding unconstitutional the act regulating rents, etc., in the
District of Columbia, in proceedings by a landlord to oust a tenant
holding over. The facts are stated in the opinion, post, 153.

Opinion

HOLMES, J., Opinion of the Court

MR. JUSTICE HOLMES delivered the opinion of the court.

This is a proceeding brought by the
defendant in error, Hirsh, to recover possession of the cellar and first
floor of a building on F Street in Washington which the plaintiff in
error, Block, holds over after the expiration of a lease to him. Hirsh
bought the building while the lease was running, and on December 15,
1919, notified Block that he should require possession on December 31,
when the lease expired. Block declined to surrender the premises,
relying upon the Act of October 22, 1919, c. 80, Title II -- "District
of Columbia Rents"; especially § 109, 41 Stat. 297, 298, 301. That is
also the ground of his defence in this Court, and the question is
whether the statute is constitutional, or, as held by the Court of
Appeals, an attempt to authorize the taking of property not for public
use and without due process of law, and for this and other reasons void.

By § 109 of the act, the right of a tenant to occupy any hotel, apartment, or "rental property," i.e., any building or part thereof, other than hotel or apartment (§ 101),
is to continue notwithstanding the expiration of his term, at the
option of the tenant, subject to regulation by the Commission appointed
by the act, so long as he pays the rent and performs the conditions as
fixed by the lease or as modified by the Commission. It is provided in
the same section that the owner shall have the right to possession "for
actual and bona fide occupancy by himself,
or his wife, children, or dependents . . . upon giving thirty days'
notice in writing." According to his affidavit, Hirsh wanted the
premises for his own use, but he did not see fit to give the thirty
days' notice because he denied the validity of the act. The statute
embodies a scheme or code which it is needless to set forth, but it
should be stated that it ends with the declaration in § 122 that the
provisions of Title II are made necessary by emergencies growing out of
the war, resulting in rental conditions in the District dangerous to the
public health and burdensome to public officers, employees and
accessories, and thereby embarrassing the Federal Government in the
transaction of the public business. As emergency legislation, the Title
is to end in two years unless sooner repealed.

No doubt it is true that a legislative
declaration of facts that are material only as the ground for enacting a
rule of law, for instance, that a certain use is a public one, may not
be held conclusive by the Courts. Shoemaker v. United States,147 U.S. 282, 298. Hairston v. Danville & Western Ry. Co.,208 U.S. 598, 606. Prentis v. Atlantic Coast Line Co.,211 U.S. 210, 227. Producers Transportation Co. v. Railroad Commission,251 U.S. 228,
230. But a declaration by a legislature concerning public conditions
that, by necessity and duty, it must know, is entitled at least to great
respect. In this instance, Congress stated a publicly, notorious and
almost worldwide fact. That the emergency declared by the statute did
exist must be assumed, and the question is whether Congress
was incompetent to meet it in the way in which it has been met by most
of the civilized countries of the world.

The general proposition to be maintained is
that circumstances have clothed the letting of buildings in the District
of Columbia with a public interest so great as to justify regulation by
law. Plainly circumstances may so change in time or so differ in space
as to clothe with such an interest what at other times or in other
places would be a matter of purely private concern. It is enough to
refer to the decisions as to insurance, in German Alliance Insurance Co. v. Lewis,233 U.S. 389; irrigation, in Clark v. Nash,198 U.S. 361, and mining, in Strickley v. Highland Boy Gold Mining Co.,200 U.S. 527.
They sufficiently illustrate what hardly would be denied. They
illustrate also that the use by the public generally of each specific
thing affected cannot be made the test of public interest, Mt. Vernon-Woodberry Cotton Duck Co. v. Alabama Interstate Power Co.,240 U.S. 30,
32, and that the public interest may extend to the use of land. They
dispel the notion that what in its immediate aspect may be only a
private transaction may not be raised by its class or character to a
public affair. See also Noble State Bank v. Haskell,219 U.S. 104, 110, 111.

The fact that tangible property is also
visible tends to give a rigidity to our conception of our rights in it
that we do not attach to others less concretely clothed. But the notion
that the former are exempt from the legislative modification required
from time to time in civilized life is contradicted not only by the
doctrine of eminent domain, under which what is taken is paid for, but
by that of the police power in its proper sense, under which property
rights may be cut down, and to that extent taken, without pay. Under
the police power, the right to erect buildings in a certain quarter of a
city may be limited to from eighty to one hundred feet. Welch v.Swasey,214 U.S. 91. Safe pillars may be required in coal mines. Plymouth Coal Co. v. Pennsylvania,232 U.S. 531. Billboards in cities may be regulated. St. Louis Poster Advertising Co. v. St. Louis,249 U.S. 269. Watersheds in the country may be kept clear. Perley v. North Carolina,249 U.S. 510.
These cases are enough to establish that a public exigency will
justify the legislature in restricting property rights in land to a
certain extent without compensation. But if, to answer one need, the
legislature may limit height to answer another, it may limit rent. We
do not perceive any reason for denying the justification held good in
the foregoing cases to a law limiting the property rights now in
question if the public exigency requires that. The reasons are of a
different nature, but they certainly are not less pressing. Congress
has stated the unquestionable embarrassment of Government and danger to
the public health in the existing condition of things. The space in
Washington is necessarily monopolized in comparatively few hands, and
letting portions of it is as much a business as any other. Housing is a
necessary of life. All the elements of a public interest justifying
some degree of public control are present. The only matter that seems
to us open to debate is whether the statute goes too far. For, just as
there comes a point at which the police power ceases and leaves only
that of eminent domain, it may be conceded that regulations of the
present sort, pressed to a certain height, might amount to a taking
without due process of law. Martin v. District of Columbia,205 U.S. 135,
139. Perhaps it would be too strict to deal with this case as
concerning only the requirement of thirty days' notice. For although
the plaintiff alleged that he wanted the premises for his own use, the
defendant denied it, and might have prevailed upon that issue under the
act. The general question to which we have adverted must be decided, if
not in this, then in the next, case, and it should be disposed of now. The main point against the law is
that tenants are allowed to remain in possession at the same rent that
they have been paying, unless modified by the Commission established by
the act, and that, thus, the use of the land and the right of the owner
to do what he will with his own and to make what contracts he pleases
are cut down. But if the public interest be established, the regulation
of rates is one of the first forms in which it is asserted, and the
validity of such regulation has been settled since Munn v. Illinois,94 U.S. 113.
It is said that a grain elevator may go out of business, whereas here
the use is fastened upon the land. The power to go out of business,
when it exists, is an illusory answer to gas companies and waterworks,
but we need not stop at that. The regulation is put and justified only
as a temporary measure. See Wilson v. New,243 U.S. 332, 345, 346. Fort Smith & Western R.R. Co. v. Mills,253 U.S. 206. A limit in time, to tide over a passing trouble, well may justify a law that could not be upheld as a permanent change.

Machinery is provided to secure to the
landlord a reasonable rent. § 106. It may be assumed that the
interpretation of "reasonable" will deprive him in part at least of the
power of profiting by the sudden influx of people to Washington caused
by the needs of Government and the war, and, thus, of a right usually
incident to fortunately situated property -- of a part of the value of
his property as defined in International Harvester Co. v. Kentucky,234 U.S. 222. Southern Ry. Co. v. Greene,216 U.S. 400,
414. But while it is unjust to pursue such profits from a national
misfortune with sweeping denunciations, the policy of restricting them
has been embodied in taxation, and is accepted. It goes little if at
all farther than the restriction put upon the rights of the owner of
money by the more debatable usury laws. The preference given to the
tenant in possession is an almost necessary incident of the policy, and
is traditional in English law. If the tenant remained subject to the landlord's power to evict, the attempt to limit the landlord's demands would fail.

Assuming that the end in view otherwise
justified the means adopted by Congress, we have no concern, of course,
with the question whether those means were the wisest, whether they may
not cost more than they come to, or will effect the result desired. It
is enough that we are not warranted in saying that legislation that has
been resorted to for the same purpose all over the world is futile or
has no reasonable relation to the relief sought. Chicago, Burlington & Quincy R.R. Co. v. McGuire,219 U.S. 549, 569.

The statute is objected to on the further
ground that landlords and tenants are deprived by it of a trial by jury
on the right to possession of the land. If the power of the Commission
established by the statute to regulate the relation is established, as
we think it is, by what we have said, this objection amounts to little.
To regulate the relation and to decide the facts affecting it are
hardly separable. While the act is in force, there is little to decide
except whether the rent allowed is reasonable, and upon that question
the courts are given the last word. A part of the exigency is to secure
a speedy and summary administration of the law, and we are not prepared
to say that the suspension of ordinary remedies was not a reasonable
provision of a statute reasonable in its aim and intent. The plaintiff
obtained a judgment on the ground that the statute was void, root and
branch. That judgment must be reversed.

THE CHIEF JUSTICE MR. JUSTICE VAN DEVANTER, MR. JUSTICE McREYNOLDS and I dissent from the opinion and judgment of the court. The grounds of dissent are
the explicit provisions of the Constitution of the United States; the
specifications of the grounds are the irresistible deductions from those
provisions and, we think, would require no expression but for the
opposition of those whose judgments challenge attention.

The National Government by the Fifth
Amendment to the Constitution, and the States by the Fourteenth
Amendment, are forbidden to deprive any person of "life, liberty, or
property, without due process of law." A further provision of the Fifth
Amendment is that private property cannot be taken for public use,
without just compensation. And there is a special security to contracts
in § 10 of Article I in the provision that "No State shall . . . pass
any . . . law impairing the obligation of contracts. . . ." These
provisions are limitations upon the national legislation, with which
this case is concerned, and limitations upon state legislation, with
which Marcus Brown Holding Co. v. Feldman, post
170, is concerned. We shall more or less consider the cases together,
as they were argued and submitted on the same day and practically depend
upon the same principles, and what we say about one applies to the
other.

The statute in the present case is
denominated "The Rent Law," and its purpose is to permit a lessee to
continue in possession of leased premises after the expiration of his
term, against the demand of his landlord and in direct opposition to the
covenants of the lease, so long as he pays the rent and performs the
conditions as fixed by the lease or as modified by a commission created
by the statute. This is contrary to every conception of leases that the
world has ever entertained, and of the reciprocal rights and
obligations of lessor and lessee.

As already declared, the provisions of the
Constitution seem so direct and definite as to need no reinforcing words
and to leave no other inquiry than does the statute under review come within their prohibition? It is asserted,
that the statute has been made necessary by the conditions resulting
from the "Imperial German war." The thought instantly comes that the
country has had other wars with resulting embarrassments, yet they did
not induce the relaxation of constitutional requirements nor the
exercise of arbitrary power. Constitutional restraints were increased,
not diminished. However, it may be admitted that the conditions
presented a problem and induced an appeal for government remedy. But we
must bear in mind that the Constitution is, as we have shown, a
restraint upon government, purposely provided and declared upon
consideration of all the consequences of what it prohibits and permits,
making the restraints upon government the rights of the governed. And
this careful adjustment of power and rights makes the Constitution what
it was intended to be and is, a real charter of liberty, receiving and
deserving the praise that has been given it as "the most wonderful work
ever struck off at any given time by the brain and purpose of man." And
we add that more than a century of trial "has certainly proven the
sagacity of the constructors, and the stubborn strength of the fabric."

The "strength of the fabric" cannot be
assigned to anyone provision; it is the contribution of all, and
therefore it is not the expression of too much anxiety to declare that a
violation of any of its prohibitions is an evil -- an evil in the
circumstance of violation, of greater evil because of its example and
malign instruction. And against the first step to it this court has
warned, expressing a maxim of experience -- "Withstand beginnings." Boyd v. United States,116 U.S. 616, 635. Who can know to what end they will conduct?

The facts of this litigation point the
warning. Recurring to them, we may ask, of what concern is it to the
public health or the operations of the Federal Government who shall occupy a cellar, and a room above it, for
business purposes in the City of Washington? -- (the question in this
case); and why is it the solicitude of the police power of the State of
New York to keep from competition an apartment in the City of New York?
-- (the question in the other case). The answer is to supply homes to
the homeless. It does not satisfy. If the statute keeps a tenant in,
it keeps a tenant out; indeed, this is its assumption. Its only basis
is, that tenants are more numerous than landlords, and that, in some
way, this disproportion, it is assumed, makes a tyranny in the landlord,
and an oppression to the tenant, notwithstanding the tenant is only
required to perform a contract entered into not under the statute, but
before the statute, and that the condition is remedied by rent fixing --
value adjustment -- by the power of the Government. And this, it is
the view of the opinion, has justification because "space in Washington
is limited," and "housing is a necessary of life." A causative and
remedial relation in the circumstances we are unable to see. We do see
that the effect and evil of the statute is that it withdraws the
dominion of property from its owner, superseding the contracts that he
confidently made under the law then existing and subjecting them to the
fiat of a subsequent law.

If such exercise of government be legal,
what exercise of government is illegal? Houses are a necessary of life,
but other things are as necessary. May they too be taken from the
direction of their owners and disposed of by the Government? Who
supplies them, and upon what inducement? And, when supplied, may those
who get them under promise of return, and who had no hand or expense in
their supply, dictate the terms of retention or use, and be bound by no
agreement concerning them?

An affirmative answer seems to be the
requirement of the decision. If the public interest may be concerned,
as in the statute under review, with the control of any form [p162] of property, it can be concerned with the control of
all forms of property. And certainly, in the first instance, the
necessity or expediency of control must be a matter of legislative
judgment. But, however, not to go beyond the case -- if the public
interest can extend a lease, it can compel a lease; the difference is
only in degree and boldness. In one as much as in the other, there is a
violation of the positive and absolute right of the owner of the
property. And it would seem, necessarily, if either can be done,
unoccupied houses or unoccupied space in occupied houses can be
appropriated. The efficacy of either to afford homes for the homeless
cannot be disputed. In response to an inquiry from the bench, counsel
replied that the experiment had been tried or was being tried in a
European country. It is to be remembered that the legality of power
must be estimated not by what it will do, but by what it can do.

The prospect expands and dismays when we
pass outside of considerations applicable to the local and narrow
conditions in the District of Columbia. It is the assertion of the
statute that the Federal Government is embarrassed in the transaction of
its business, but, as we have said, a New York statute is submitted to
us, and counsel have referred to the legislation of six other States.
And there is intimation in the opinion that Congress, in its enactment,
has imitated the laws of other countries. The facts are significant,
and suggest the inquiry, have conditions come, not only to the District
of Columbia, embarrassing the Federal Government, but to the world as
well, that are not amenable to passing palliatives, so that socialism,
or some form of socialism, is the only permanent corrective or
accommodation? It is indeed strange that this court, in effect, is
called upon to make way for it and, through the instrument of a
constitution based on personal rights and the purposeful encouragement
of individual incentive and energy, to declare legal a power exerted for
their destruction. [p163] The inquiry occurs, have we come to the realization of
the observation that "War, unless it be fought for liberty, is the most
deadly enemy of liberty?"

But, passing that and returning to the
Constitution, it will be observed, as we have said, that its words are a
restraint upon power, intended as such in deliberate persuasion of its
wisdom as against unrestrained freedom.

And it is significant that it is not
restraint upon a "Governing One," but restraint upon the people
themselves, and in the persuasion, to use the words of one of the
supporters of the Constitution, that "the natural order of things is for
liberty to yield, and for government to gain ground." Sinister
interests, its conception is, may move government to exercise; one class
may become dominant over another; and, against the tyranny and
injustice that will result, the framers of the Constitution believed
precautions were as necessary as against any other abuse of power. And
so careful is it of liberty that it protects in many provisions the
individual against the magistrate.

Has it suddenly become weak -- become not a
restraint upon evil government, but an impediment to good government?
Has it become an anachronism, and is it to become "an archeological
relic," no longer to be an efficient factor in affairs, but something
only to engage and entertain the studies of antiquarians? Is not this
to be dreaded -- indeed, will it not be the inevitable consequence of
the decision just rendered? Let us see what it justifies, and upon what
principle. But first and preliminary to that inquiry are the
provisions it strikes down. We have given them, but we repeat them. By
§ 10 of Article I, it is provided, "No State shall . . . pass any . . .
law impairing the obligation of contracts, . . ." By the Fifth
Amendment, no person can be deprived of property without due process of
law. The prohibitions need no strengthening comment. They are as
absolute as axioms. A contract existing, its obligation is impregnable.
[p164] The elements that make a contract or its obligation we
need not consider. The present case is concerned with a lease, and that
a lease is a contract we do not pause to demonstrate either to lawyers
or to laymen, nor that the rights of the lessor are the obligations of
the lessee, and, of course, the rights of the lessee are the obligations
of the lessor -- the mutuality constituting the consideration of the
contract -- the inducement to it and its value, no less to the lessee
than to the lessor.

What were the rights and obligations in the
present case, and what was the right of Hirsh to control his property?
Hirsh is the purchaser of a lot in the City of Washington; Block is the
lessee of the lot, and he agreed that, at the end of his tenancy, he
would surrender the premises, and this and "each and every one of the
covenants, conditions and agreements," he promised "to keep and
perform." Hirsh at the end of the term demanded possession. It was
refused, and against this suit to recover possession there was pleaded
the statute. The defense prevailed in the trial court; the statute was
declared unconstitutional in the Court of Appeals. It is sustained by
the decision just announced.

It is manifest, therefore, that, by the
statute, the Government interposes with its power to annul the covenants
of a contract between two of its citizens and to transfer the uses of
the property of one and vest them in the other. The interposition of a
commission is but a detail in the power exerted -- not extenuating it in
any legal sense -- indeed, intensifies its illegality, takes away the
right to a jury trial from any dispute of fact.

If such power exist, what is its limit and
what its consequences? And by consequences we do not mean who shall
have a cellar in the City of Washington or who shall have an apartment
in a million-dollar apartment house in the City of New York, but the
broader consequences of unrestrained power and its exertion against
property, having [p165] example in the present case, and likely to be applied
in other cases. This is of grave concern. The security of property,
next to personal security against the exertions of government, is of the
essence of liberty. They are joined in protection, as we have shown,
and both the National Government (Fifth Amendment) and the States
(Fourteenth Amendment) are forbidden to deprive any person "of life,
liberty, or property, without due process of law," and the emphasis of
the Fifth Amendment is that private property cannot be "taken for public
use, without just compensation." And, in recognition of the purpose to
protect property and the rights of its owner from governmental
aggression, the Third Amendment provides,

No soldier shall, in time of peace be
quartered in any house, without the consent of the owner, nor in time of
war, but in a manner to be prescribed by law.

There can be no conception of property aside from its control and use, and upon its use depends its value. Branson v. Bush,251 U.S. 182,
187. Protection to it has been regarded as a vital principle of
republican institutions. It is next in degree to the protection of
personal liberty and freedom from undue interference or molestation. Chicago, Burlington & Quincy R.R. Co. v. Chicago,166 U.S. 226.
Our social system rests largely upon its sanctity, "and that State or
community which seeks to invade it will soon discover the error in the
disaster which follows." Knoxville v. Knoxville Water Co.,212 U.S. 1, 18.

There is not a contention made in this case
that this court has not pronounced untenable. An emergency is asserted
as a justification of the statute and the impairment of the contract of
the lease. A like contention was rejected in Ex parte Milligan,
4 Wall. 2. It was there declared (page 120) "that the principles of
constitutional liberty would be in peril unless established by
irrepealable law." And it was said that

the Constitution of the United States is a law for rulers and people, equally in war [p166] and in peace, and covers with the shield of its
protection all classes of men, at all times, and under all
circumstances. No doctrine involving more pernicious consequences was
ever invented by the wit of man than that any of its provisions can be
suspended during any of the great exigencies of government.

But what is the power that is put in
opposition to the Constitution and supersedes its prohibitions? It is
not clear from the opinion what it is. The opinion gives to the police
power a certain force, but its range is not defined. Circumstances, it
is said, "have clothed the letting of buildings in the District of
Columbia with a public interest so great as to justify regulation by
law," though at other times and places such letting may be only of
private concern, and the deduction is justified, it is said by analogy
to the business of insurance, the business of irrigation, and the
business of mining. German Alliance Insurance Co. v. Lewis,233 U.S. 389; Clark v. Nash,198 U.S. 361; Strickley v. Highland Boy Gold Mining Co.,200 U.S. 527. It is difficult to handle the cases or the assertion of what they decide. An opposing denial only is available.

To us, the difference is palpable between
life insurance and the regulation of its rates by the State and the
exemption of a lessee from the covenants of his lease with the approval
of the State, in defiance of the rights of the lessor. And as palpably
different is the use of water for mining or irrigation or manufacturing,
and eminent domain exercised for the procurement of its means with the
requirement of compensation, and as palpably different is eminent
domain, with attendant compensation, exercised for railways and other
means for the working of mines.

And there is less analogy in laws regulating
the height of buildings in business sections of a city; or the
requirement of boundary pillars in coal mines to safeguard the employees
of one in case the other should be abandoned and allowed to fill with
water; or the regulation of bill-boards [p167] in cities on account of their menace to morality,
health and decency (in what way it is not necessary to specify); or the
keeping clear of watersheds to protect the water reservoirs of cities
from damage by devastating fires or the peril of them, from accumulation
of "tree tops, boughs and lops" left upon the ground. [*]

The cases and their incidents hardly need
explanatory comment. They justify the prohibition of the use of
property to the injury of others, a prohibition that is expressed in one
of the maxims of our jurisprudence. Such use of property is, of
course, within the regulating power of government. It is one of the
objects of government to prevent harm by one person to another by any
conduct.

The police power has some pretense for its
invocation. Regarding alone the words of its definition, it embraces
power over everything under the sun, and the line that separates its
legal from its illegal operation cannot be easily drawn. But it must be
drawn. To borrow the illustration of another, the line that separates
day from night cannot be easily discerned or traced, yet the light of
day and the darkness of night are very distinct things. And as distinct
in our judgment is the puissance of the Constitution over all other
ordinances of power, and as distinct are the cited cases from this case,
and if they can bear the extent put upon them, what extent can be put
upon the case at bar or upon the limit of the principle it declares? It
is based upon the insistency of the public interest and its power. As
we understand, the assertion is that legislation can regard a private
transaction as a matter of public interest. It is not possible to
express the possession or exercise of more unbounded or irresponsible
power. It is true, in mitigation of this declaration and of the alarm
that it causes, it is said that the declaration [p168] is not necessarily conclusive on the courts, but "is
entitled, at least, to great respect." This is intangible to
measurement or brief answer. But we need not beat about in generalities
or grope in their indetermination in subtle search for a test of a
legal judgment upon the conditions, or the power exerted for their
relief. "The Rent Law" is brought to particularity by the condemnation
of the Constitution of the United States. Call it what you will -- an
exertion of police or other power -- nothing can absolve it from
illegality. Limiting its duration to two years certainly cannot. It is
what it does that is of concern. Besides, it is not sustained as the
expedient of an occasion, the insistence of an emergency, but as a power
in government over property based on the decisions of this court whose
extent and efficacy the opinion takes pains to set forth and illustrate.
And as a power in government, if it exist at all, it is perennial and
universal, and can give what duration it pleases to its exercise,
whether for two years or for more than two years. If it can be made to
endure for two years, it can be made to endure for more. There is no
other power that can pronounce the limit of its duration against the
time expressed in it, and its justification practically marks the doom
of judicial judgment on legislative action.

The wonder comes to us, what will the
country do with its new freedom? Contracts and the obligation of
contracts are the basis of its life and of all its business, and the
Constitution, fortifying the conventions of honor, is their conserving
power. Who can foretell the consequences of its destruction or even
question of it? The case is concerned with the results of the German
war, and we are reminded thereby that there were contracts made by the
National Government in the necessity or solicitude of the conduct of the
war -- contracts into which patriotism eagerly entered, but, it may be,
interest was enticed, by the promise of exemption [p169] from a burden of government. Burdens of government are
of the highest public interest, and their discharge is of imperious
necessity. Therefore, the provocation or temptation may come to those
who feel them that the property of others (estimated in the millions,
perhaps) should not have asylum from a share of the load. And what
answer can be made to such demand within the principle of the case now
decided? Their promises are as much within the principle as the lease
of Hirsh is, for, necessarily, if one contract can be disregarded in the
public interest, every contract can be; patriotic honor may be involved
in one more than in another, but degrees of honor may not be attended
to -- the public interest being regarded as paramount. At any rate,
does not the decision just delivered cause a dread of such result and
take away assurance of security and value from the contracts and their
evidences? And it is well to remember that other exigencies may come to
the Government making necessary other appeals. The Government can only
offer the inducement and security of its bonds, but who will take them
if doubt can be thrown upon the integrity of their promises under the
conception of a public interest that is superior to the Constitution of
the United States?

It comes to our recollection also that some
States of the Union, in consummation of what is conceived to be a
present necessity, have also entered into contracts of like kind. They,
too, may come under a subsequent declaration of an imperious public
interest, and their promises be made subject to it.

The prophecy is not unjustified. This court
has at times been forced to declare particular state laws void for
their attempted impairment of the obligation of contracts. To
accusations hereafter of such an effect of a state law, this decision
will be opposed, and the conception of the public interest. [p170]

Indeed, we ask, may not the State have other
interests besides the nullification of contracts, and may not its
police power be exerted for their consummation? If not, why not? Under
the decision just announced, if one provision of the Constitution may
be subordinated to that power, may not other provisions be? At any
rate, the case commits the country to controversies, and their decision,
whether for the supremacy of the Constitution or the supremacy of the
power of the States, will depend upon the uncertainty of judicial
judgment.

This blog post quickly became one of the most controversial I ever wrote. To this day it is still one of the most read.

A Nobel Prize winning economist (and Obama Administration sycophant) quickly condemned me and what I wrote claiming I had no idea what I was saying. He actually posted a link to my blog on his own which, quite honestly, was dumb since his website drove tons of traffic to mine. He's famous and I'm not. In fact, half of his own readers thought he was wrong.

Former General Electric CEO Jack Welch himself suggested the same thing I did in a now famous tweet he wrote in October 2012, nearly a year after my original blog post. I met Welch and his wife while the two were on a book tour in 2013 and he enthusiastically agreed with me saying, and I quote, "the books are being cooked. I know it."

Well, it turns out Jack Welch and I were right. Two employees with the U.S. Census Bureau now claim in writing to Congressional investigators and the national press they were ordered to fabricate unemployment data in order to make the real unemployment rate appear lower. These employees state on the record this fabrication has been occurring "for years."

Plus these same employees were ORDERED by superiors to "make up" numbers during an election year. The unemployment rate, incidentally, dropped from 8.1% to 7.8% in this critical time, September 2012. You can guess why. For the record, White House spokesman Jay Carney has denied any wrongdoing.

The Congress of the United States has now launched a formal investigation. Look for hearings to begin in the House Oversight Subcommittee early next year. Here is the official letter informing the current director of the Census Bureau, John H. Thompson, of the impending investigation.